Current price : 104.0 / 104.7 (commission of 0.25% is embedded in the price)

YTC (at 104.7) : 5.7%

It is also possible to supercharge LippoMalls 7% perp to give higher returns. I shall share 2 scenarios:

Fund $85,000 and finance the remainder at 2.3%

Fund $125,000 and finance the remainder at 2.3%

1. Fund $85,000 and finance the remainder at borrow at 2.3%

Value of bond purchased = $250,000 x 104.7% = $261,750

Annual coupons received = $250k x 7% = $17,500

Annual finance fees paid = (261,750-85,000) x 2.3% = $4065

Annual profit = $17,500 – $4,065 = $13,435

Capital loss in 2021 if called = $261,750 – $250,000 = $11,750

Amortize this loss over 4.3 years = $11,750/4.3 = $2,732

Annual profit after capital loss = $13,435 – $2,732 = $10,703

Annual net yield = 10,703/85,000 = 12.5%

2. Fund $125,000 and finance the remainder at borrow at 2.3%

Value of bond purchased = $250,000 x 104.7% = $261,750

Annual coupons received = $250k x 7% = $17,500

Annual finance fees paid = (261,750-125,000) x 2.3% = $3,145

Annual profit = $17,500 – $3,145 = $14,355

Capital loss in 2021 if called = $261,750 – $250,000 = $11,750

Amortize this loss over 4.3 years = $11,750/4.3 = $2,732

Annual profit after capital loss = $14,355 – $2,732 = $11,623

Annual net yield = 11,623/125,000 = 9.3%

What returns are you looking at for your investments? Is 9 to 12 % annually good enough for you? If you would like to know more about how to supercharge bonds, sign up for my next bonds introduction class http://sb1.eventbrite.sg

I'm a remisier with Maybank Kim Eng, and as a bonds and REITs investor myself, I guide my clients to build resilient bonds and REITs portfolios. If you like to be guided, please contact me regarding how to become my client; It's free!